PG&E Corp. said Monday it believes thousands of Northern California wildfire victims have approved the utility’s $13.5 billion payout plan, clearing the way for PG&E to emerge from bankruptcy.
In a prepared statement, the company said that, based on preliminary results, the plan has won “overwhelming acceptance” from the approximately 70,000 victims who were eligible to vote.
The $13.5 billion is designed to compensate victims for their uninsured losses from a series of major wildfires blamed on PG&E’s faulty equipment. That includes the 2017 wine country fires and the November 2018 Camp Fire, which killed 85 people and destroyed more than 10,000 homes in Paradise.
If the final results confirm PG&E’s analysis, it would mark a major breakthrough for the company, and likely guarantee its exit from Chapter 11 bankruptcy by the state-mandated June 30 deadline.
The acceptance by victims came in spite of considerable controversy. PG&E plans to compensate victims with a $13.5 billion fund that’s half cash and half PG&E stock -- triggering complaints from some victims and their lawyers that the value of the stock would be diminished by volatility in the stock market since coronavirus pandemic struck.
In a protest against the PG&E plan, three fire victims even quit the official committee set up to represent victims’ interests in the bankruptcy case.
PG&E’s share price fell by more than half when the stock market plunged in the early weeks of the pandemic, but has regained some of the lost ground. On Monday the price was up 89 cents a share to $12.22 in early New York Stock Exchange trading.
Voting on the utility’s plan ended last Friday and final results are expected to be filed by this Friday in U.S. Bankruptcy Court. The plan needs a two-thirds super-majority to pass.
Because it’s a regulated utility, PG&E still needs the California Public Utilities’ approval for its bankruptcy plan. But that’s become increasingly likely now that Gov. Gavin Newsom has given his blessing to PG&E’s reorganization, which includes an overhaul of its leadership, a pledge to focus more stringently on public safety and an agreement to put itself up for sale if it falls short on safety measures.
According to a law passed last year, PG&E needs to have final court approval for its plan by June 30. Otherwise, the utility won’t be eligible to participate in a $21 billion insurance pool created by lawmakers to shield California’s big utilities from liabilities from future wildfires. The pool is funded by ratepayers and shareholders.